Molycorp Climbs After Executives Including CEO Buy Shares

Molycorp Inc., owner of the largest rare-earths deposit outside of China, soared the most since the shares began trading more than two years ago after executives and a director bought stock in the company. Photographer: Jacob Kepler/Bloomberg

Nov. 23 (Bloomberg) -- Molycorp Inc., owner of the largest
rare-earths deposit outside of China, soared the most since the
shares began trading more than two years ago after executives
and a director bought stock in the company.

Molycorp jumped 19 percent to $8.62 at 2:15 p.m. in New
York, after earlier gaining 20 percent, the most intraday since
the company’s initial public offering in June 2010.

John Ashburn, an executive vice president and the company’s
general counsel, bought 10,000 shares and Charles Henry, a
director, purchased 45,192 shares, according to filings made
after the close of trading on Nov. 21. Chief Executive Officer
Mark Smith purchased 20,000 shares at $6.20 each, according to a
Nov. 19 filing.

The shares have tumbled 64 percent this year partly because
of a slump in prices for rare earths, a group of 17 chemically
similar elements used in wind turbines and hybrid cars. China
supplies about 95 percent of demand for rare earths, which have
slumped since mid-2011, after a spike caused by China’s decision
to slash exports in 2010.

Molycorp plunged to its lowest last week after the
Greenwood Village, Colorado-based company said in a Nov. 9
filing that the U.S. Securities and Exchange Commission began an
investigation over the accuracy of its public disclosures.

‘Good Buy’

“It looked like a good buy at these prices,” Jonathan
Hykawy, an analyst at Toronto-based Byron Capital Markets Ltd.
who recommends buying the stock, said today in an e-mail. He
said some short sellers have been buying shares to cover their
positions.

China plans to offer subsidies to large, state-owned rare-earth producers in the country, the Financial Times reported
yesterday.

That may signal China is trying to spur a recovery in the
industry after illegal mining led to overcapacity and lowered
prices, said Laurence Balter, an analyst at Fox Island,
Washington-based Oracle Investment Research.

“It’s in China’s best interest to maintain price integrity
as they shut down illegal mining,” Balter, who recommends
buying Molycorp stock, said today in a telephone interview.
“Too low is just too low.”

Jack Lifton, a founder of rare-earth consulting firm
Technology Metals Research LLC, said the subsidies are small and
more of a symbolic gesture that indicates the government has
taken a direct interest in unregulated mining.

“They’re paying lip service and acknowledging there’s a
problem,” Lifton said today by phone. “What the government
would like to do is choke off illegal mining and get control of
the whole system. It would firm up prices.”

Jim Sims, a spokesman for Molycorp, said in a voicemail
today that Molycorp executives who have bought shares are
presumably doing it because of confidence in the company’s
future.